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A court battle between HMOs and auto accident victims that has been brewing for more than a year in the state and federal courts is on a fast track to the Pennsylvania Supreme Court now that a federal appeals court has certified the case as one that presents a question of first impression under Pennsylvania law. At issue in Wirth v. Aetna U.S. Health Care is whether HMOs have the right under Pennsylvania law to assert a subrogation claim against an auto accident victim’s tort recovery. Both sides insist that Pennsylvania law is clearly on their side. The plaintiffs argue that they shouldn’t be forced to dip into their settlements or verdicts to reimburse the insurers for any medical bills because subrogation is prohibited in all auto accident cases by the Pennsylvania Motor Vehicle Financial Responsibility Law. But the HMOs argue that Pennsylvania’s HMO Act makes them exempt from MVFRL’s anti-subrogation provision. The court battles began with a pair of class action suits filed in the Bucks County, Pa., Court of Common Pleas by attorney Ronald J. Smolow of Smolow & Landis in Trevose, Pa. The suits challenged Aetna’s practice of asserting liens against the tort recoveries for the medical benefits it has provided to auto accident victims. Both cases were removed by Aetna to federal court on the grounds that they were pre-empted by the Employee Retirement Income Security Act. But one of the cases, Nott v. Aetna U.S. Health Care, was sent back to Bucks County when U.S. District Judge Timothy J. Savage ruled that the federal law at issue — the Medicare Act — does not “completely pre-empt” the MVFRL. The Wirth case, however, remained in federal court when U.S. District Judge Harvey Bartle III agreed with Aetna that it was governed by ERISA. Since the proposed class of plaintiffs in Wirth were insured by Aetna through their employers — which was not the case in Nott — Bartle found that ERISA completely pre-empted the plaintiffs’ state law claims. Bartle later granted summary judgment in Aetna’s favor, holding that the HMO Act, passed in 1972, effectively exempted HMOs from all state insurance laws then in existence as well as future insurance laws — unless they specifically apply to HMOs. Bartle found that since MVFRL was passed later, and since it does not specifically reference HMOs in the section that prohibits subrogation, HMOs are exempt. Six months later, Aetna won again when Bucks County Judge Robert J. Mellon issued a decision that mirrored Bartle’s. Now, in an appeal from Bartle’s decision, the 3rd U.S. Circuit Court of Appeals has upheld his ruling on the pre-emption question, but deferred ruling on the ultimate question of the HMOs’ subrogation rights until the Pennsylvania Supreme Court has weighed in. In an unpublished decision, the unanimous three-judge panel decided that the apparent conflict in the two Pennsylvania statutes ought to be resolved first by the Pennsylvania courts. “The seemingly incongruous Pennsylvania statutory provisions before us implicate an issue of substantial public importance heretofore unresolved,” 3rd Circuit Judge Marjorie O. Rendell wrote in an opinion joined by Chief Judge Anthony J. Scirica and D. Michael Fisher. Rendell noted that MVFRL’s anti-subrogation provision, Section 1720, if read alone, would “clearly bar Aetna’s claim.” But Rendell noted that Section 1560(a) of the HMO Act exempts HMOs from any state law that regulates insurance “unless such law specifically and in exact terms applies to such health maintenance organization.” As a result, Rendell found there were “serious questions concerning the applicability of Section 1720 to Aetna, an HMO.” The plaintiffs argued that Bartle’s determination that the HMO Act exempts Aetna from Section 1720 runs counter to the plain language of the MVFRL and basic precepts of statutory construction, as well as clear legislative intent. Smolow argued that Section 1720′s prohibition on subrogation of benefits paid by “a program, group contract or other arrangement” applies to the Aetna because the terms “program” and “group contract” clearly include HMOs. They’re also the very terms used by Aetna itself to describe Wirth’s health care plan, Smolow said. Smolow argued that the HMO Act does not require actual use of the words “health maintenance organization,” and that the statute therefore does not exempt Aetna from MVFRL’s anti-subrogation provision. When the Pennsylvania General Assembly passed MVFRL, Smolow argued, it enacted a uniform system of law covering a whole class of subjects. As a result, he argued, MVFRL should be construed to have repealed the HMO Act — a pre-existing statute relevant to the same class of subjects. But Aetna’s lawyer, Raymond J. Quaglia of Ballard Spahr Andrews & Ingersoll, argued that because Section 1720 was passed after the HMO Act, the Legislature’s failure to specifically name HMOs in Section 1720 — despite knowing of the requirement to do so set forth in Section 1560(a) of the HMO Act — is significant. Apparently both lawyers were persuasive because the 3rd Circuit decided not to decide the issue. Instead, the panel concluded that the question presented in the case was one that met the test for certification to the Pennsylvania Supreme Court. Rendell found that the issue was one of first impression in the Pennsylvania courts and was “of such substantial public importance as to require prompt and definitive resolution” by the state Supreme Court. After certifying the question to the state Supreme Court, Rendell said, the 3rd Circuit will retain jurisdiction and issue a second opinion once the state court has ruled. Depending on whether the Pennsylvania Supreme Court agrees to hear the case, Rendell said, “we will issue a second opinion either adopting the Pennsylvania court’s determination (if certification is granted), or determining the issue on our own (if certification is denied).”

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